Continuous Software Release and Business Model Innovation

When software release becomes ever more frequent, the traditional pipeline of discrete development disciplines collapses into a converged “DevOps” paradigm, including how software is bought and sold. Software business models, customer financing models and software development methods are all in a period of rapid change and innovation to meet the surging demand for software.

At the quarterly release threshold, for example, software business models must move to subscription-based bundling, because customers do not buy every quarter. At the weekly release threshold, business models must move to pay-per-use with volume discounts, because customers typically do not know what their future usage will be.

Of course, a free, advertising-based business model has obvious affinities with continuous software release, since the collection of revenue is not connected to software release, just to popularity. Kent Beck (see talk) also notes that startup businesses at the weekly or daily thresholds are often financed via bootstrap, private or angel funding: In other words, frequent releases are also associated with rapidly developing business models, either to achieve break-even faster, or to attract incremental investment.

More frequent releases pushes software managers toward more transient, compact, contingent, and project-based practices, whether the software is developed within corporate IT, or by a software vendor. Even in the corporate sector, we are seeing internal development projects using pay-as-you-go or contingent financing, where projects are evaluated constantly for positive cash flow or other business contributions.

For customers of software firms, pay-per-use software is purchased as operating-expense, not capital-expense. OpEx funding minimizes their risk: Rather than having to over-estimate the maximum amount of software you may need, Software-as-a-Service allows customers to match demand with licensing supply dynamically. OpEx funding is also less likely to cause vendor lock-in by eliminating large sunk capital costs.

This much is clear: Software demand keeps increasing up to the point of continuous release and delivery. Software demand is growing so great, that there is not only no time to test, there is little or no time to buy!

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